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Wind project cancellation deals a blow to Ontario’s business reputation

The mixed bag that is Bill 2, currently making its way through the legislature, aims to make Hydro One accountable (again), get York University students back to school (again) and drive a stake through the White Pines Wind Project in Prince Edward County.

It is the latter schedule, the White Pines Wind Project Termination Act, that drew Germany’s ambassador to Canada, Sabine Sparwasser, into media interviews Monday, offering a big picture take on the implications of the project’s cancellation.

The White Pines Wind Project in Prince Edward County was scheduled to go into operation this fall. (Lars Hagberg / THE CANADIAN PRESS)

“I’ve been involved in numerous activities where we say, ‘Come to Canada, this is a very good place to do business,’” Sparwasser said in an interview with the Star.

You know where this is going. That sentence is like one of those narrative cliffhangers where the action pivots and you anticipate that, bam, events are not going to unfold as originally predicted.

“We’re trying to enhance direct investment, and in that context it is not good news if you have a case where a project by a German company that has been here for the last 10 years and a project that’s close to completion and that has respected all the regulation and has produced all the licences required, is suddenly or is in the process of being suddenly unilaterally cancelled and basically dismantled.”

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The swift cancellation of the nine-turbine wind farm is an obvious blow to WPD AG, the German parent to White Pines and a company with a two-decades-plus history in offshore and onshore wind projects, extending now into 18 countries and more than 2,000 turbines.

In May the company, which promotes the merits of wind energy as “a future worth living,” dispelled rumours of a $1-billion (U.S.) sale for all or part of the business. That same month Ontario’s Independent Electricity System Operator issued a Notice to Proceed to White Pines based on the company’s satisfying certain prerequisites, including regulatory approvals, a completed financing plan and documentation related to impact assessments.

The ordered demise of White Pines is an obvious win for the legion of protesters who have spent years fighting the down-scaled project — the original plan was for 27 turbines — which was scheduled to go into operation this fall. Prince Edward County keeps the company of close to 100 municipalities and counties that declared themselves unwilling hosts for industrial turbines, a reminder of the deeply unpopular rural stance to the pro-wind power initiatives of the deceased Liberal government. Anti-turbine forces are jubilant, or would be were it not for the ongoing construction of the project, pending passage of the legislation. Four of the turbines are up. The supporting infrastructure is largely in place. Construction continues.

If the German parent saw an opportunity to intervene in a swift and firm way, it wasn’t immediately obvious. CEO Harmut Brosamle sent a letter to Premier Doug Ford that managed to sound both strangely courtly and to make Ford sound like a newly sprung Kim Jong-il.

“A new elected government has any right to pursue a different energy policy. That is a fundamental principle of democracy,” Brosamle wrote. “But do you think, dear Premier, that it is fair and equitable that a project right before completion is now being ruined retroactively and that our company is suffering serious damage through no fault of its own? Your reconsideration would be greatly appreciated.”

So it has fallen to Ambassador Sparwasser to advance the broader trade argument. “We’re living in a very uncertain world in terms of world trade policy,” she says. “Germany and Canada and the EU and Canada are very like-minded partners. We have concluded the most progressive, comprehensive economic and trade agreement. We do want to do more business. We do want to do more in trade co-operation.”

And direct investment? “We’re all trying to enhance the good relationship and more co-operation and more direct investment, and in that context a story where investors actually who have invested in good faith and have fulfilled all the obligations but find themselves in a really, really difficult position and their project is basically cancelled on the spot.

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“That,” Sparwasser concludes, “is not a good story to tell.”

Nor does the closing chapter scan well. Bill 2 bars any action for compensation or damages, and limits compensation to a proscribed formula that takes into account direct expenses incurred (construction, employee termination, etc.) along with decommissioning costs associated with leaving the lands in a “clean and safe condition.”

Eight years ago, White Pines obtained a FIT (feed-in tariff) contract, the program that was supposed to position Ontario as a North American leader in clean energy. The company now estimates its potential loss as something in the area of $100 million.

Bay of Quinte MPP and Government House Leader Todd Smith, who promised during the provincial election to see the project through to cancellation, offered White Pines this tip in the Picton Gazette last week: “The best advice for the company is to honour the will of the government standing up for the will of the people.”

Go quietly, in other words. White Pines has chosen a different path, highlighting how poorly this reflects upon Ontario’s open-for-business mantra. In this the company is right.

Jennifer Wells is a business columnist based in Toronto. Reach her on email: jenwells@thestar.ca

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